January 19, 2022
Pay day Loans
- “loan sharks” – never borrow money from them
- interest rate is ridiculously high (350% or higher)
Interest rate now
- rate now is very low (lowest on record), close to 0% since the beginning of Covid
- interest rates are low around the world (western developed countries)
- the governments want to help the business to survive Covid *cheaper to borrow money from the bank
- in the last 3 years, very cheap to borrow money to buy a house
- e.g. Kwok’s mortgage now: 2.24% over five years (lowest was around 1.50% over 5 years)
- that is the main reason why housing prices in the GTA are going up very quickly
- when a lot of people want to buy something (a condo/house), the price goes up
- demand is high, but supply is limited (no land in Toronto)
- the construction companies are building north of Toronto, north of Newmarket
- problems: interest rate will go up this year, it will go up four to five times this year
- Kwok thinks the Canadian interest rate will go up next week
- people with mortgages/loans will have to pay more with higher rate
- sad part: some may not be able to afford the higher payment (e.g. gym, restaurants may force to close or declare bankruptcy)
- banks will make more money (higher profit) when rate is higher
(e.g. Royal Bank of Canada, in 2021, profit was $18 billion)
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